• dylsworth posted a comment on ?Roku Earnings Announcement 1 month, 1 week ago

    ?Roku Earnings Announcement

    Earlier this month Roku, Inc. reported a first quarter earnings of $0.54 per share on revenue of $574.2 million. Moreover, the digital media giant reported a 35% increase in active users over the last 12 months. These announcements, among other positive news, pushed the price of ROKU shares by 11.6% on Friday after earnings were publicized.

    When compared to earnings from the previous quarter, this significant upward price movement may seem unwarranted – that is until the consensus of expectations for Roku earnings are taken into account. Roku was generally predicted to report a loss of -$0.09 to -$0.12 per share, meaning the actual report exceeded expectations by 550-700% per share.

    This scenario can serve as a great example of what happens to anything that can be bought or sold when actual value exceeds general perception. Thinking of exchange-traded companies as familiar goods or services instead of multi billion dollar companies may help traders to familiarize themselves with share price volatility during earnings reports. If you want to buy tickets to see the New York Yankees in September, but they’ve only won a 1/10 of their games this season, those September tickets aren’t going to be very expensive. However, if the Yankees suddenly win three back-to-back series and one of those wins is against the team that’s holding first place, those September tickets are likely to increase greatly in price. This concept can be applied to the increase in valuation seen in ROKU shares this week – expectations were low, but confirmation of positive financial reports and other important news pushed prices up.